SAN FRANCISCO, March 11, 2013 /PRNewswire/ -- Salesforce.com (NYSE: CRM), the enterprise cloud computing company, today announced its intention to offer, subject to market and other conditions, $1 billion aggregate principal amount of convertible senior notes due 2018 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Act"). Salesforce.com also expects to grant the initial purchasers of the notes an option to purchase up to an additional $150 million aggregate principal amount of the notes to cover overallotments.
The notes will be unsecured, unsubordinated obligations of salesforce.com, and interest will be payable semi-annually. Prior to January 1, 2018, the notes will be convertible only upon the occurrence of specified events; thereafter until maturity the notes will be convertible at any time. Upon conversion, the notes will be settled in cash and shares of salesforce.com's common stock (subject to salesforce.com's right to pay cash in lieu of all or any portion of such shares). Final terms of the notes, including the interest rate, conversion price and other terms, will be determined by negotiations between salesforce.com and the initial purchasers of the notes.
In connection with the offering of the notes, salesforce.com expects to enter into privately-negotiated convertible note hedge transactions with one or more of the initial purchasers and their affiliates and/or other financial institutions (the "hedge counterparties"). Salesforce.com also expects to enter into privately-negotiated warrant transactions with the hedge counterparties. Taken together, the convertible note hedge transactions and the warrant transactions are expected, but not guaranteed, to reduce the potential dilution to salesforce.com's common stock upon the conversion of the notes. Salesforce.com has been advised that in connection with hedging the convertible note hedge transactions and warrant transactions, the hedge counterparties may enter into various derivative transactions concurrently with or shortly after the pricing of the notes. These activities could have the effect of increasing or preventing a decline in the price of salesforce.com's common stock concurrently with, or shortly after, the pricing of the notes. In addition, the hedge counterparties may modify their hedge positions from time to time following the pricing of the notes (and are particularly likely to do so during any observation period relating to a conversion of the notes) by entering into or unwinding derivative transactions with respect to salesforce.com's common stock, and/or by purchasing or selling shares of salesforce.com common stock or the notes. Any of these activities could adversely affect the value of salesforce.com's common stock and the trading price of the notes.